I am asking myself that question for a very good reason – I will be presenting on that very topic at the Material Handling and Logistics Conference in September, which means I have a few months to come up with the answer. Would welcome your help.

There are actually quite a number of issues around this topic, it seems to me. For example, just what is the timeframe for pondering this supply chain future? 2015? 2020? 2025? I guess it has to be near enough that it has some meaning for most of us. My particular presentation is targeted at 2015, and somewhere between that and 2020 seems about right to me.

For example, if I understand the “Store of the Future” concept and showplace from Germany’s Metro Stores Group, I believe it uses a lot of cool technologies (RFID, powerful kiosks, interactive displays, etc.). However, these technologies are largely here now, almost by definition, since they are used in the model store. Since no one has really implemented most of these technologies, certainly all together, it does represent the “future,” but maybe the relatively near future. It’s just a matter of the adoption curve retailer by retailer.

Gilmore Says:

"When do we reach a point in the level of supply chain automation, both physical and informational, that there just is not a whole lot more we can do in terms of supply chain improvements?"What do you say?

As most prognosticators acknowledge, and I better understand after thinking about this, predicting the “what” of future is relatively easy compared to getting the timing close to right.

What I am also struggling with is the temptation to paint a picture of a supply chain world in which simply everything is automated – though, indeed, that may very well be a huge component of the future vision. In fact, as I have pondered on this topic, I have at times become modestly depressed around this prospect. When do we reach a point in the level of supply chain automation, both physical and informational, that there just is not a whole lot more we can do in terms of supply chain improvements? Is that point likely to come fairly soon, or is it decades away? (More on this subject soon.) I hope, somewhat selfishly, that this day is still a long way off.

Ditto with regards to “integration.” It would also be relatively easy to simply paint a vision where we have virtually 100% integration both within the enterprise and across trading partners and networks. Much more dicey, of course, would be predicting the timing of this (remembering, for example, the lessons and history of EDI), but even beyond that, does foretelling a world of near perfect automation and integration really tell us much? I don’t really think so.

In the 1990s, there used to be an event called the “Warehouse of the Future.” I think it died off, in part, because in the end, it just showed whatever the latest advances in current automation were. Soon, it just didn’t seem very futuristic.

Of course, others have and will continue to take a stab at this. Perhaps the most well-known is MIT’s Supply Chain 2020 project, started I think in 2003 and initially led by my friend Dr. Larry Lapide. Here we are now just 10 years away from that end date that seemed quite distant back in 2003. Is it time for Supply Chain 2025?

I am not sure if that effort ever resulted in a definitive vision for what supply chain management would be like in 2020. Among the contributions the effort has made, however, is to well articulate that the future supply chain is inextricably linked to what happens in many other spheres, especially political, economic, and regulatory.

Consider just a few examples: Do democracy and economic freedom continue their generally steady march forward, leading to the developing economies also continuing to grow in economic might and importance, or do things take a step backward? What will China be like 10-15 years from now? Will the world’s biggest companies become larger and larger, and thus ever more dominant - and thus leading to a supply chain world of a few giants and many indentured suppliers - or will there be changing regulatory views on this? (Just plot out a 10% increase in sales each year for Wal-Mart and see where that takes it after another decade.)

What happens with free trade, nationalism, and protectionism? Do we have new energy sources, or will oil be the main fuel 10 years from now and be at $500 a barrel in a “peak oil” world? What will be the demographics in 2025 in the US and around the globe?

You get the idea. My view right now is I can’t predict the supply chain of the future without some assumptions about the world of the future, which I thank MIT for pointing out.

More recently, IBM released a study on "The Smarter Supply Chain of the Future." It suggested that the future supply chain would be “instrumented, interconnected and intelligent,” (which I liked, as I had written a research note as an industry analyst on the “intelligent supply chain” as far back as 1999), and the report provided some reasonable detail behind each. Though I enjoyed the report, I didn’t feel it really stretched our thinking too far. Maybe that’s just an impossible task.

The Global Commerce Initiative and Cap Gemini have also done work in this area, starting with a report on The Future Supply Chain 2016. There is a strong “sustainability” bent to the work, but I think their vision for more collaborative logistics (shared truck capacity across even competitors, hub locations outside of major cities from which local deliveries are made, for example) have a great deal of merit and likelihood of occurring.

All this also makes me wonder how far out companies themselves are thinking about this. What is the horizon of your company’s supply chain master planning? It is really just a timeline of advancing today’s basic strategies, or does it really encompass innovation? As my friend Gene Tyndall recently noted to me, today “strategic planning” often has a view of only about 18 months, since many think the world is too dynamic, especially right now, to consider a horizon much beyond that. It was partly an exaggeration, but a good one to make the point about the environment we operate in today.

So, in between everything else, this is one thing I will be working on over the next couple of months. I think it is a fun, if challenging, question. If you have some thoughts on this and would like to talk, I would be happy to listen. Send me a note at the Feedback button below.

Do you have any thoughts about what the “supply chain of the future” will look like? Is it more than just automation and integration of everything? How fast do you think that is likely to happen – and when it does, does it mean we will have to advance in supply chain? Let us know your thoughts at the Feedback button below.

Wall Street investors finished last week with some profit taking, which resulted in the overall downward movement of all the major averages. Less dramatic in the software group, Ariba suffered the largest fall (down 3.8%). In the hardware group, both Intermec and Zebra were off (down 11.5% and 4.1%, respectively). In the transportation and logistics group, Yellow Roadway nose dived 35%. Others within the group with double-digit losses were Prologis (down 19.7%), Ryder (down 12.6%), FedEx (down 11.8%), and CSX (down 10.8%).

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Near the start of the holiday weekend, more Feedback on our First Thoughts' piece on “Xbox Live is the Future of Supply Chain," which argued that the network version of the popular gaming system showed the model for how technology would support real-time supply chain visibility and collaboration in the future.

That includes our Feedback of the Week from KOH Niak Wu of the Singapore Institute of Manufacturing Technology, who says this type of approach might finally kill the Bullwhip Effect. Also a note from Microsoft’s own Paul Manikas, who says Microsoft’s business tools incorporate many of the features we cited in Xbox already.

Feedback of the Week: On Xbox Live:

The first thing that springs to mind is the bullwhip effect. As we know, a major cause of the bullwhip is information latency, i.e., each upstream entity in the supply chain sees a slight increase in demands -- highly prominent in a forecast-driven environment. This is what I like to call perceived demand -- massaged demand information or rather suppositions on demand based entirely on forecasted data spiraling upstream. The mere notion that real-time data is communicated throughout the entire XBox Live network seems to me that the crux of supply chain visibility (and thus a weakened bullwhip effect) can be achieved. Of course, the usage of RFID technology aims to achieve such transparency throughout the supply chain too, but with a rather tethering reach.

With such information ubiquity achieved simply by purchasing an XBox, perhaps a possible future step would be to integrate RFID systems with the XBox, thus achieving complete, not to mention real-time, visibility of the supply chain.

KOH Niak Wu
Singapore Institute of Manufacturing Technology

More On Xbox Live:

Interesting notion of using Xbox Live to facilitate communication and collaboration across an extended supply chain.

In fact, Microsoft offers the real-time communication capabilities that you highlighted (web conferencing, instant messaging, presence) at the enterprise level with our Office Communications Server (OCS). We have combined OCS with Sharepoint and our Business Intelligence and database management tools to create a solution that specifically addresses supply chain collaboration and visibility. The BI tools monitor incoming data and flag alerts or exceptions. The user can drill down into the data to analyze the root cause. Then using OCS, he can determine whether a resource is available and start up a communication using phone, video or instant messaging. The solution removes the latency of finding and then fixing problems, before they ripple through your supply chain.

There are far too many communication barriers through voices. Facebook applications are the future of business communication as they allow incredible scope and flexibility and help remove cultural and language barriers and also time barriers. Huge amounts of data in all mediums including video can be passed on.

Ben McCambridgePolar ColdNew Zealand

I’m not familiar with Xbox Live, but online, live gaming has been going on for many years.

At first glance, I’m thinking that the analogy, though intriguing, is pretty flawed, in that in a game, most players are focused on the one ‘episode,' and in supply chain, we are likely conducting many, many ‘episodes’ or transactions simultaneously; in some cases, across lots of time zones.

Further, managing relationships across an extensive number of touch points at various levels of authority….there is a lot of opportunity for misunderstanding in the communications. Nevertheless, if there were a ‘lead’ monitoring the whole network from ‘above’ with alert capability, yet only costing a penny a case (or less), that would be impressive! Likely some Global 3PL’s already claim this ability to do it for super high-value channels.

Maybe I need to loosen up the ‘blinders’ a notch or two!

Thomas W. MiraliaDistribution Technology

Of course this is a very doable, probably paradigm. In fact, you get your transportation folks also on board, manufacturing, customs, even competitors involved. YES - competitors. Hey, maybe an item you need, they have, but is not selling. You suddenly have an alternative source of supply.

Wow - re: tight control of available resources and, in this case, inventory. Add to all that a global perspective and partners. Now can we finally call it more accurately than a Global economy. Or Global supply chain.

We have only scratched the surface on the possibilities. The human thought lies well ahead of the technology. NOT the inverse. So, yes, the Xbox possibilities do bring to life that which we have already demanded the need for. Now we need more innovators to adapt it.

Dennis Palko

This really is a good article and, with a son that lives on Xbox Live, I can certainly relate. We have at least started this form of communication, but I don’t think people use it to the degree it could be used. It's called instant messaging. To have instant and continuous communication with people near and far, we would all have to look like those people walking down the street, driving, and sitting in trains with devices in their ears looking like they are talking to themselves.

If you work for a big company, there are already far too many meetings and analysis paralysis is the norm. IM can get you in touch with whomever you want (time difference notwithstanding as the same issue would exist with Xbox-type communication), you can share files and bring in others…..with no Xbox Live subscription required.

We’re not there as you suggest, but we’re closer than many people think.

Jeff Drimmer
Global Logistics Manager
Varian, Inc.

I loved your article, Icouldn’t agree with you more!

We need to start thinking outside the box and really pay attention tothese new ways of living that are emerging around us.

There is so much that we could do by adding some creativity to how we use the tools that arealready available to us.

Azucena Y. TamezOperational ExcellenceCardinal Health Inc.

I work in the supply chain field and play Xbox live. You could not be any more right. The Xbox live service is like no other. Is it possible to see that type of networking in the supply chain field? I am not so sure, not because of technological restraints, but the current culture within the supply chain field. I cannot speak for all individuals, but at the age of 26, I am always the youngest at the table (by quite a few years). I do not have any issues with the older generation members, but being the first generation to see the transition from pen to mouse, I feel I am more open to significant changes similar to what the Xbox live service has brought to the video game industry.

Erick Barden

On your piece on X-Box live, it is an interesting connection and vision, but I have a somewhat different point of view. I think from a data and trend visibility point of view, there are enough tools out there to seamlessly share data. What is important in supply chain interactions is management by exception. My concern with real time communications is getting overwhelmed with too much contact, especially in a situation where there are many vendors, and reacting too quickly and dynamically before a trend has really occurred. I believe daily communications and exception-based communications is adequate and there are enough systems such as instant messaging, VOIP, video conferencing to make that pretty inexpensive and quick. So, in short, great idea, but to me, a virtual community for supply chain is overkill. Sorry to be a contrarian.

Lalit Panda
SVP SCM and IS
Harman Consumer Group

Your enthusiasm for connecting the supply chain participants is phenomenal – the Xbox metaphor is good and fun. The real metaphor that business owners, leaders, fiduciaries need to see is the trillions of wasted capacity, inventory, lost sales, etc., because most business leaders think their supply chain is “just fine.”

My experience is Xbox live combined with more of an asynchronous (loosely coupled) sharing of commitments, purchases and FYI activity is the correct approach. Inter-enterprise commitments of $ just cannot happen in real time – communication can, but the important part is after the communication, what is the commitment? We have used a series of spreadsheet working surfaces along with a number of asynchronous messaging/reconciliation tools back to structured planning data storage in S&OP and logistics tracking pretty successfully for years.

Today, the cycle times of inter-enterprise supply chain planning commitments can literally be months… just shortening the commitments and demand and supply netting to weeks cleans up a lot of the challenges. Probably takes out 30% of working capital for most firms and improves delivery commitment services levels by many % points. If there is 2 trillion in waste in today’s average supply chains, that is $600 Billion in value while opening up phenomenal new business models and solutions?

An example would be lower prices for consumers/business buyers who buy with longer lead time for delivery vs. high prices for product “off the shelf!"

Jon Kirkegaard

SUPPLY CHAIN TRIVIA

Q.
What is the approximate share of Asia in terms of global manufacturing output?

A. Though there are disputes about the data and how it should be measured, the data for 2007 (most recent available) suggests all Asian countries combined produced about 35% of total manufactured goods globally. That compares to a share for the US of about 20%.